Land boom

By Nick Gevock, of The Montana Standard - 02/24/2007

Sam Korsmoe, executive director of the Madison County Economic Development Council, poses in front of a statute of a fisherman in Ennis recently. Korsmoe says recent figures on wage growth that showed Madison County leading the state shows that local residents are learning to take advantage of the area’s natural amenities to cater to tourists, as well as a rapid rise in real estate sales commissions. Nick Gevock / The Montana STandard.

ENNIS — For Don Bowen, 2005 was a year to remember.

The broker and co-owner of Arrow Real Estate in Ennis said it was also, from a sales perspective, a year for the record books.

“2005 was our best year ever,” he said recently. “It was the best year for everybody.” That’s an understatement, according to federal numbers on wage growth that showed Madison County leading the state. The growth was largely fueled by a massive rise in income in the real estate sector, according to recently released figures from the U.S. Bureau of Economic Analysis.

The numbers break down the rise in wages across all jobs and are for 2005, the last year for which statistics are available. Real estate commissions for agents who live in Madison County jumped from just over $1 million in 2004 to more than $10.8 million in 2005, the key factor that helped fuel a staggering 23 percent increase in wages in the county, BEA statistics show.

The average wage per job in Madison County in 2005 was $27,332, up sharply from the 2004 average of $22,300.

Economist Susan Ockert with the Montana Department of Commerce said that growth can be attributed largely to rapidly rising real estate prices and the ballooning interest earned off land sales, mostly in the Big Sky area.

“That’s a 1,700 percent increase — that’s absolutely phenomenal,” Ockert said.

Montana outpaces nation Montana outpaced the nation in wage growth from 2004 to 2005 with a 5 percent increase compared to a 3.5 percent rise across the country. Treasure State workers earned an average of $29,139 in 2005.

Only Wyoming and Louisiana, two states heavily dependent on petroleum development, had a higher rate of wage growth. And in Montana, four of the five counties with the highest wage growth were counties with burgeoning natural resource jobs, primarily oil and gas or mining. They included Prairie, Treasure, Fallon and Judith Basin counties.

But Madison County topped them all.

Ockert said clearly the rapid growth and exploding prices in Big Sky are the reason, especially at upscale developments such as the Yellowstone Club and Moonlight Basin. The surge is driven not only by rising real estate prices, but also the expensive homes being built in the area.

“The land is being sold, and then the houses that are being constructed are being sold,” she said. “You’re talking $2 to $3 million properties.” The wage statistics apply only to people who reside in Madison County. And that means the county is likely only seeing a small portion of the total sales commissions in Big Sky because many agents live in Gallatin County.

But Melinda Merrill, managing broker at Reed Real Estate in Ennis, said it’s not just Big Sky that saw a real estate boom in 2005. Property in the Madison Valley jumped dramatically that year.

And the growth wasn’t confined only to the Madison Valley. The Ruby Valley also had a significant rise in prices, according to Kay Colwell with Headwaters Realty in Sheridan.

She too said 2005 was her best year in terms of sales of homes and land.

Industries show growth While real estate commissions saw the greatest jump in wages, there are other industries that also showed healthy growth. Several of the largest gains were seen in industries tied to Big Sky, whether it was construction or the service jobs that help run the resorts.

See BOOM, Page D6 Construction income rose from $9.5 million in 2004 to $11.5 million in 2005. And wages earned in entertainment and recreation, which includes resort workers and hunting and fishing guides, rose from $2.8 million to $4.2 million.

Wages made in the accommodations and restaurant businesses also grew from $4.9 million to $5.6 million.

The jump in those types of jobs is a sign that Madison County residents are learning to take advantage of the recreational opportunities available, said Sam Korsmoe, director of the Madison County Economic Development Council.

“That’s kind of smart money in the sense that we’re saying ‘Well, what do we have — we’ve got rivers, we’ve got mountains and we’re using them,” he said. “It’s not a bad picture at all because it’s a somewhat varied economy.” Given the demographics of Madison County, it’s also a surprise, Korsmoe said. The county is the fifth oldest in the state, with an average age of 44 years, and half of the total income comes from non-labor sources, primarily pensions, investments and Social Security.

Simply put, young people leave Madison County and rarely return because of a lack of jobs, he said.

But the problem with most of the growth areas reflected in the wage numbers if they’re either seasonal, or prone to downturns. The tourist trades have large off-seasons and construction has historically been cyclical, with some major highs and lows in terms on money earned, Korsmoe said.

And while the service industries growth is a good sign, those jobs pay too little to entice young people to move to the county.

“What we lack as a county is that solid element, whether it’s service or manufacturing sector, that just kind of chugs along and keeps going,” he said. “It’s kind of hard to attract a young family.” — Reporter Nick Gevock may be reached via email at nick.gevock@mtstandard.com